Tag: minimum wage

In his “Letter from Birmingham Jail,” Martin Luther King Jr. identifies the government as the enemy of the rights and dignity of blacks. He was locked up for marching without a permit. King cites the injustices of the police and courts in particular. And he inspired a movement to raise public consciousness against state brutality, especially as it involved fire hoses, billy clubs, and jail cells.

Less obvious, however, had been the role of a more covert means of subjugation — forms of state coercion deeply embedded in the law and history of the United States. And they were offered as policies grounded in science and the scientific management of society.

Consider the minimum wage. How much does racism have to do with it? Far more than most people realize. A careful look at its history shows that the minimum wage was originally conceived as part of a eugenics strategy — an attempt to engineer a master race through public policy designed to cleanse the citizenry of undesirables. To that end, the state would have to bring about the isolation, sterilization, and extermination of nonprivileged populations.

The eugenics movement — almost universally supported by the scholarly and popular press in the first decades of the 20th century — came about as a reaction to the dramatic demographic changes of the latter part of the 19th century. Incomes rose and lifetimes had expanded like never before in history. Such gains applied to all races and classes. Infant mortality collapsed. All of this was due to a massive expansion of markets, technology, and trade, and it changed the world. It meant a dramatic expansion of population among all groups. The great unwashed masses were living longer and reproducing faster….

The eugenics movement, as an application of the principle of the “planned society,” was deeply hostile to free markets. As The New Republic summarized in a 1916 editorial:

“Imbecility breeds imbecility as certainly as white hens breed white chickens; and under laissez-faire imbecility is given full chance to breed, and does so in fact at a rate far superior to that of able stocks.”

To counter the trends unleashed by capitalism, states and the national government began to implement policies designed to support “superior” races and classes and discourage procreation of the “inferior” ones. As explained by Edwin Black’s 2003 book
, War Against the Weak: Eugenics and America’s Campaign to Create a Master Race, the goal as regards women and children was exclusionist, but as regards nonwhites, it was essentially exterminationist. The chosen means were not firing squads and gas chambers but the more peaceful and subtle methods of sterilization, exclusion from jobs, and coercive segregation.

It was during this period and for this reason that we saw the first trial runs of the minimum wage in Massachusetts in 1912. The new law pertained only to women and children as a measure to disemploy them and other “social dependents” from the labor force. Even though the measure was small and not well enforced, it did indeed reduce employment among the targeted groups.

To understand why this wasn’t seen as a failure, take a look at the first modern discussions of the minimum wage appearing in the academic literature. Most of these writings would have been completely forgotten but for a seminal 2005 article in the Journal of Economic Perspectives by Thomas C. Leonard.

Leonard documents an alarming series of academic articles and books appearing between the 1890s and the 1920s that were remarkably explicit about a variety of legislative attempts to squeeze people out of the work force. These articles were not written by marginal figures or radicals but by the leaders of the profession, the authors of the great textbooks, and the opinion leaders who shaped public policy.

“Progressive economists, like their neoclassical critics,” Leonard explains, “believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the ‘unemployable.’”

At least the eugenicists, for all their pseudo-scientific blathering, were not naïve about the effects of wage floors. These days, you can count on media talking heads and countless politicians to proclaim how wonderful the minimum wage is for the poor. Wage floors will improve the standard of living, they say. But back in 1912, they knew better — minimum wages exclude workers — and they favored them precisely because such wage floors drive people out of the job market. People without jobs cannot prosper and are thereby discouraged from reproducing. Minimum wages were designed specifically to purify the demographic landscape of racial inferiors and to keep women at the margins of society.

The famed Fabian socialist Sidney Webb was as blunt as anyone in his 1912 article “The Economic Theory of the Minimum Wage”:

Legal Minimum Wage positively increases the productivity of the nation’s industry, by ensuring that the surplus of unemployed workmen shall be exclusively the least efficient workmen; or, to put it in another way, by ensuring that all the situations shall be filled by the most efficient operatives who are available.

The intellectual history shows that whole purpose of the minimum wage was to create unemployment among people who the elites did not believe were worthy of holding jobs.

And it gets worse….

Eugenics as an idea eventually lost favor after World War II, when it came to be associated with the Third Reich. But the labor policies to which it gave rise did not go away. They came to be promoted not as a method of exclusion and extermination but rather, however implausibly, as a positive effort to benefit the poor.

Whatever the intentions, the effects are still the same. On that the eugenicists were right. The eugenics movement, however evil its motive, understood an economic truth: the minimum wage excludes people from the job market. It takes away from marginal populations their most important power in the job market: the power to work for less. It cartelizes the labor market by allowing higher-wage groups access while excluding lower-wage groups.

King wrote of the cruelty of government in his day. That cruelty extends far back in time, and is crystallized by a wage policy that effectively makes productivity and upward mobility illegal. If we want to reject eugenic policies and the racial malice behind them, we should also repudiate the minimum wage and embrace the universal right to bargain.

Minimum wage laws are designed to reduce poverty and provide income equality for the American workforce. However, economists vary in their opinion of what a lower wage can buy. Moreover, millions of part-time workers continue their struggle to live on a bare minimum wage earning.

On the other hand, this last August, Fox News reported close to 110 million Americans are receiving government assistance, including Medicaid, subsidized housing, food stamps, and welfare. In fact, 83 million people collected Medicaid and 51.5 million people collected and used food stamps.

Michael Tanner, from the Cato Institute, reported to Fox News that in some states welfare recipients receive benefits that are equivalent to a $20 an hour salary, whereas most states pay a minimum wage of $7.25.

Tanner explained the following to Fox News. “So in many cases people could actually do better on welfare than they could in an entry level job.”

Some Americans need support and help in the form of subsidizes like food stamps and Medicaid. However, the benefits derived from welfare programs far surpass the minimum wage employees receive from their employers.

An interesting dynamic is contrasting tonight’s embrace of Republican politicians – votes in favor of increases in the minimum wage.

So far, South Dakota, Arkansas, and Nebraska have voted to increase their minimum wages today. You will note that these states are not hotbeds of progressive politics. Alaska has a pending vote to raise theirs as well. We should not be surprised to see it pass either. We know from polls that raises in minimum wages are popular up until people are told that increases may cost jobs. Then they turn against it. Emily Ekins explains how that polling works here. A majority are okay with it increases in minimum wages driving up prices. But if it costs jobs, a majority turns against it.

And so the debate becomes about costing jobs. Does it really? We have a real world example to explain. In Los Angeles, the city passed an ordinance requiring “living wages” for employees of hotels near the city’s airport back in 2008. As they considered expanding the law to all large hotel workers in the city earlier this year they commissioned studies to analyze the impact of their previous increase. Here’s what Christopher Thornberg of Beacon Economics discovered: